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SCMP-Delayed reaction to Asian turm

Subject: SCMP-Delayed reaction to Asian turmoil trips up economy 

South China Morning Post
Thursday  May 27  1999

Delayed reaction to Asian turmoil trips up economy

Economic isolation spared it the brunt of the crisis but Burma has finally
been snared by Asia's financial meltdown, according to a senior minister.

Asia's plunge into economic turmoil in 1997 at first "had some effect" on
Burma, the military government's Economics Minister, Brigadier General David
Abel, said yesterday.

The country had been spared from the "initial crisis shock" by
underdeveloped capital markets, tight foreign-exchange controls and its
non-convertible, non-tradable currency, the kyat.

"However as the crisis deepened and turned into an economic turmoil, Myanmar
[Burma] was impacted by the 'contagion' effect," Mr Abel said at the 56th
Association of Southeast Asian Nations Chambers of Commerce and Industry
council meeting.

He said Burma's gross domestic product growth fell from 6.4 per cent in
1996, to 5.7 per cent in 1997, then edged down further to 5.6 per cent last

He attributed most of the decline not to the economic crisis but the El Nino
weather phenomenon which severely affected Burma's agriculture-dominated

The government has set a 6.2 per cent growth target for this year, despite
the turmoil in the region.

Many foreign observers believe the economy has been reduced to "crisis
point" by an investment drought triggered by the Asian turmoil and
international sanctions imposed to punish perceived human-rights abuses.

Others believe that even if the figures are taken at face value, 5.6 per
cent growth in an economy as underdeveloped as Burma's is hardly impressive.

Mr Abel admitted foreign direct investment (FDI) had been largely scuppered
by the Asian crisis, as investors tried to cope with their own problems at

"Asean investors accounted for almost 60 per cent of FDI prior to the
crisis, their investment fell by 70 per cent in calendar year 1998," he

Burma joined Asean in July 1997 and has been dismayed to see its hoped-for
investment windfall stillborn.

The investment drought means there is little cash for desperately needed
spending on the creaking infrastructure, including the archaic electricity

grid which produces daily power cuts.